What: Helix Energy Solutions Group Inc reported much weaker than expected second-quarter results after the market closed yesterday. That poor showing fueled a deep sell-off on Tuesday, with the stock down more than 17% as of this writing. That said, volatility is the norm when Helix reports quarterly results, as the company's stock price made double-digit moves the last two times it reported.
So what: For the quarter, Helix reported revenue of $166 million, which was not only down 45.7% year over year, but missed analysts estimates by $27.7 million. The company didn't only miss big on revenue -- it was way off from analysts' earnings estimates, turning in a loss of $0.03 per share, when analysts were expecting a profit of $0.15 per share. Investors don't like big misses, and are showing their displeasure by selling off the stock.
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Helix blamed the weak oil market for its poor showing. The company noted that its well intervention business was negatively affected by a longer-than-planned Q4000 regulatory dry-dock, while it also experienced customer delays on the H534. In addition, the company's sales, general, and administrative expenses spiked to 10% of revenue, which was up from just 6.7% last quarter. This was partially due to an extra $2.5 million in charges associated with what now looks to be an uncollectable receivable. Meanwhile, interest expenses nearly doubled as the company took delivery of the Q5000 using proceeds from a term loan to fund the final payment to the shipyard. Suffice it to say that what could go wrong did go wrong.
Now what: Helix Energy Solutions endured a rough quarter, as two of its key vessels were out of work longer than expected. To make matters worse, the company also had higher expenses -- the downturn in the energy market is impacting its customers, leading to uncertainty regarding collection of a big receivable.
That said, the company is working to reduce its costs and has substantial liquidity, which puts it in a position to weather the downturn better than many of its competitors.
The article Huge Earnings Miss Sends Helix Energy Solutions Group Inc's Stock Down 17% originally appeared on Fool.com.
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